Real Estate's Expectations from Union Budget 2016-17

Anuj Puri, Chairman & Country Head, JLL India

· Provide clarity on beneficiaries under Pradhan Mantri Awas Yojana

The
government recently announced that interest rates of 3% would be
applicable on loans of up to Rs. 12 lakh and 4% on loans of up to Rs 9
lakh, under the Pradhan Mantri Awas Yojana (PMAY). Now, two new income
categories can avail higher loans with interest subsidies. The Budget
should give more clarity on the actual definition of beneficiaries who
can avail of these benefits.

For example - would young
urban professionals hoping to buy their own apartments but not belonging
to either the EWS (Economically Weaker Section) or the LIG (Low Income
Group) segments be allowed similar subventions? Also, affordable housing
is largely available in the fringe areas of metros and tier-II, III
cities. Would certain redevelopment projects within metros meeting the
affordable housing definition be granted similar benefits?

· Provide income tax incentives for first-time home buyers

Can
a first-time home buyer looking at an affordable project get additional
income tax incentives for at least five years? The Budget should throw
more light on this. Any efforts in this direction would help the
government move closer to its objective of delivering ‘Housing for All
by 2022’.

Also, given the lack of institutionalized
rental housing in Indian cities, such a move could spur many
fence-sitters into moving out from their rented apartments to owned
homes. It could also encourage more developers to come up with products
suiting these segments.

The
government should increase the tax deduction limit for housing loans,
especially for buyers in metropolitan cities. The current limit of Rs. 2
lakh is insignificant, given the ticket sizes in cities like Mumbai
where most houses are priced at Rs. 1 crore and above. Also, tax
concessions on house insurance premiums could be introduced to encourage
end-users to insure their homes. Similarly, the tax exemption limit
should be increased by about Rs. 1 lakh and be auto-set to match
inflationary trends in a financial year.

· Provide clarity on GST

While
the goods and services tax (GST) tax structure has been announced, the
real estate industry is waiting with bated breath to see which tax rate
is applied to the real estate and construction industry. Clarification
would also be needed on the abatement scheme, and whether credit for
input tax would be allowed if the composition scheme has been availed by
developers.

· Ease tax reporting and tax slabs

The
government, with it mantra of maximum governance, should look at easing
the tax reporting structures in the upcoming Budget. Also, the benefits
of demonetisation exercise should be passed on to the common man in the
form of easing of tax slabs and offering some higher degree of rebate.
With the earlier stated intention of reducing corporate tax as well, the
idea is to widen the tax net while simultaneously reducing actual tax
incidence.

· Raise house rent deduction limit

Salaried
persons get house rent allowance (HRA) as a component of their total
salary, and can therefore claim a deduction. This deduction can be
substantial in cases where the salary and its HRA component are higher.
However, self-employed persons and those who draw lump sum pays without
an HRA component can only claim a maximum deduction of Rs 2,000 a month
under Section 80GG. The Budget can and should address this anomaly.